The Gentrification Project That Turned into a Rat Castle on Ludlow

What was once an out-of-town developer’s plan to bring even more deluxe gentrification to the Lower East Side has instead turned into a crumbling eyesore, a haven for rats, and a traffic nightmare that keeps snaring delivery trucks on Ludlow Street.

Frustrated neighbors have watched as the almost-finished building at 179 Ludlow fell into disrepair, with an illegal sidewalk shed jutting so far out into the street that trucks traveling down Ludlow get wedged between it and another shed across the street. In the abandoned building itself, rats have taken over, and a 2,000-square-foot retail space that could have brought in $25,000 a month is now ankle-deep in rat shit.

Owner Michelangelo Russo paid $5.2 million—a discount price—for the half-completed building at auction 13 months ago. The seven-story cinderblock building, just footsteps from Katz’s Deli on Houston Street, was part of the construction boom in the trendy Lower East Side. It was supposed to have been another luxury apartment building, like the Ludlow, its fancy neighbor, where a two-bedroom can rent for as much as $9,000 per month. Russo reportedly put about a million dollars into the building, installing European-style molding, white-marble bathroom counters, heated terraces, and a private roof deck in the penthouse. At one point last year, Madonna’s reps even came to check out the retail space, where Madge was thinking of opening a Kabbalah Center. But late last summer, after Madonna passed on the property and the mortgage crisis was coming into full bloom, the money to finish the building ran out.

“Everything just stopped,” said David Chang, a longtime resident who is known on the block as the “Mayor of Ludlow” because of his regular presence cleaning up the street. Workers walked off the job in August after Russo stopped paying them, according to contractor Robert Lavecchia, whose company, Mulberry Group, did much of the framing and flooring for the building. “He bounced a $300,000 check on me!” Lavecchia says.

The building was never properly sealed and soon began attracting rats. Then the sidewalk shed slowly started to fall apart. Chang attempted to mend one part of the shed himself, wrapping wire around two broken bars to keep them from falling into the road, where they could puncture tires. Construction workers across the street also tried to help by putting up a mirror where the shed created a pedestrian blind spot.

Then there was the problem of the truck trap: In May, the city received several complaints that trucks were continually hitting the scaffolding. On June 3, Chang watched from his regular seat on the bench outside a health-food store as a delivery truck got caught between the scaffolding on either side of the street. “They had to get a tow truck and block off the street to get the truck unstuck,” Chang said. That happened at least one more time; the vehicle was released after police shimmied onto the roof of the truck and removed a panel from the shed.

The city’s Department of Buildings has since issued several violations for the unsafe shed, but has not made any moves to tear it down. (The department didn’t return calls seeking comment regarding 179 Ludlow.)

The man responsible—Russo—stopped answering his phone months ago: He did not return calls from several contractors, whom he reportedly owes about $400,000, and he did not return calls from the Voice seeking comment.

“This wound up being the first domino toppling over,” said James Famularo, a former broker for the building and executive vice president of New York Commercial Realty Services. Famularo said Russo, a New Jersey property owner who wanted to make the foray into Manhattan real estate, simply got in over his head. “It was bad timing, and probably not the best choice of a project to take on as a first project in Manhattan. . . . As a result of this, he lost this building and several buildings in Jersey.” The fact that Russo signed a balloon-payment mortgage with a whopping 24 percent interest rate couldn’t have helped, either.

These days, 179 Ludlow is in foreclosure proceedings, and the property is now being advertised, presumably by the lender, as an “excellent investment/conversion property” to be sold as is for $8.9 million. Famularo believes that price is optimistic at best.

“It’s incurring water damage right now, so every day that goes by, it’s probably worth less and less. . . . I went in there six months ago to show it [to a prospective buyer], and there was about four inches of rodent feces on the floor. There were dead rodents as big as cats on the floor in the basement. I’m a New York guy, born and bred here, and I’ve never seen anything more disgusting,” he said. “I wouldn’t go back in there even if they paid me the $9 million cash!”